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INDIVIDUAL CORPORATION

Citizen Alien Foreign


NRA- NRA-
RC NRC RA DC RFC NRFC
ETB NETB
INTEREST INCOME
Local Currency Deposit
Short term interest or yield (Less than 5 yrs) 20% 25% 20% 30%
Long term interest or yield --- Exempt --- 25% 20% 30%
* Pre-termination interest rate
- Less than 3 years 20% 25% 20% 30%
- 3 to less than 4 years 12% 25% 20% 30%
- 4 to less than 5 years 5% 25% 20% 30%
Foreign Currency Deposit
Interest from FCDU / OBU depositary banks 7.5% Exempt 7.5% Exempt 7.5% 7.5% Exempt
Interest from EFCDU / OBU banks 10% Exempt 10% Exempt 10% 10% Exempt
Interest from foreign loans --- Regular Income Tax (RIT) Rules Applies --- 20%
--- Regular
Interest from Tax-free covenant bonds 30% 30% 30%
Income Tax ---
* Interest income of NRA, NRC, RC on bonds, mortgages, deeds of trust, or other similar obligations of DC or RFC with
TAX-FREE or TAX-REDUCTION provision where the obligor shoulders in whole or in part any tax on the interest shall
subject to a final withholding tax of 30%.
NRA- NRA-
RC NRC RA DC RFC NRFC
ETB NETB
DIVIDEND INCOME
From Domestic Corporations, in general
- January 1998 earnings 15% if
6% subject to tax
- January 1999 earnings 8% 20% 25% sparing rule;
--- Exempt --- otherwise
- January 2000 earnings and thereafter 10%
30%
From Real Estate Investment Trust or REIT 10% Exempt^ 10% <10%^^ <10%^^ <10%^^
From Foreign Corporations --- Regular Income Tax (RIT) Rules Applies ---
1) ^ For OFW, exempt up to 7 years from August 12, 2011; 2) ^^ Subject to preferential tax rate under applicable treaty
NRA- NRA-
RC NRC RA DC RFC NRFC
ETB NETB
ROYALTIES
Passive Royalties, in general 20% 20% 25% 20% 30%
From cinematographic films & other sources 20% 25% 25% 20%
From books, literary works & musical compos. 10% 10% 25% 20% 30%
Active Royalties --- Regular Income Tax --- 25% --- RIT --- 30%
* Royalties of a passive nature such as royalties of claim owners or land owners of mining properties, royalties of inventors from
companies that manufacture and sell their inventions, and royalty from licensing agreements that transfers the use of trademark
or technology are subject to 20% final tax
INDIVIDUAL CORPORATION
Citizen Alien Foreign
NRA- NRA-
RC NRC RA DC RFC NRFC
ETB NETB
TAXABLE PRIZES
P10,000 and below --- Regular Income Tax --- 25% --- Regular 30%
Above P10,000 20% 25% Income Tax ---
Exempt Prizes:
1. Prizes receive by a recipient without any effort on his part to join a contest (e.g. awards such as Nobel Prize & the like);
2. The recipient is not required to render substantial future services as a condition to receiving the price or reward;
3. Prizes from sports competition that are sanctioned by their respective national sport organizations.
NRA- NRA-
RC NRC RA DC RFC NRFC
ETB NETB
WINNINGS
In general 20% 25% --- RIT --- 30%
PCSO and Lotto Winnings
* Corporate winnings and prizes are subject to Regular Income Tax (RIT).
* Winnings and prizes from foreign sources are subject to Regular Income Tax (RIT)
NRA- NRA-
RC NRC RA DC RFC NRFC
ETB NETB
SHARE IN NET INCOME of taxable partnership,
10% 20% 25% 10% 30%
joint venture and co-ownership
The share in net income includes the share in the residual profit and provisions for salary, interest and bonus to a partner.
However, if the provisions for salaries, interests and bonuses are expensed as such in the book of the partnership, they are
subject to REGULAR TAX to the receiving partner, NOT TO FINAL TAX. In this case, only the share in the residual income after
such provisions is subject to final tax.
NRA- NRA-
RC NRC RA DC RFC NRFC
ETB NETB
TAX INFORMERS REWARD 10%
Amount of Cash Reward is 10% of revenues, surcharges, or fees recovered and or fine or penalty imposed and collected; or
P1,000,000 WHICHEVER IS LOWER.

SPECIAL ALIENS
- NRA-NETBs employed by regional or area headquarters and regional operating
headquarters of multinational companies, offshore banking units, or petroleum service
contractors or subcontractors;
- Subject to 15% FINAL TAX on gross income from their employers.

Filipino employees occupying the same position as those held by special aliens
subject to 15% final tax may opt to be taxed at the same 15% final tax

OTHER APPLICATIONS OF FINAL INCOME TAX


1. Compensation income of Filipinos qualified as special aliens
2. Fringe benefits of managerial or supervisory employees
3. Income payments of residents other than depositary banks under the expanded
foreign currency deposit system (EFSDS) to offshore banking units (OBUs) and
expanded foreign currency deposit units (EFCDUs)
4. Income payments to oil exploration service contractors or sub-contractors (8%)

ENTITIES EXEMPT FROM FINAL INCOME TAX


1. Foreign governments and foreign government-owned and controlled corporations
2. International missions or organizations with tax immunity
3. General Professional Partnership
4. Qualified employee trust fund
Tax Rates
Gain on the sale, exchange and other disposition of
domestic stocks directly to buyer
- Net gain up to P100,000 5%
- Excess net gain above P100,000 10%
TWO-TIERED Capital Gains Tax
* It applies for all classes of taxpayers, individuals or corporations including NRA-NETBs and NRFCs, regardless of
the place of sale, identity of the buyer, and the length of time the domestic stocks were held by the taxpayer.
* Regarded as the MOST UNIVERSAL RULE in income taxation